Jim Rickards Gold Forecast: ‘My Intermediate Target Is $10,000 An Ounce’

James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, was interviewed by Kitco News anchor Daniela Cambone at the Silver & Gold Summit in San Francisco this past week. Rickards, who penned the USA Today and Wall Street Journal business best-seller The New Case for Gold last year, offered up the following forecast for the price of an ounce of gold. From the interview:

CAMBONE: Last time you were on Jim you made a lot of headlines with your forecast. You don’t think $10,000 gold is out of the question. People raised a lot of eyebrows. But they don’t raise eyebrows with $50,000 Bitcoin calls now. Does that surprise you?
RICKARDS: Well, I’ll leave Bitcoin out of this. But here at the Silver & Gold show, and this morning in my presentation, I went through the $10,000 gold. It’s not a made-up number. I don’t do it to get headlines or attract attention. It’s actually the price that gold would have to be to avoid deflation. If you had a gold standard, or even if you were using gold as a reference in some kind of indirect gold standard, you have to get the price right given the quantity of gold. So the implied, non-deflationary price of gold is about $10,000 an ounce, conservatively. There are other, if you change M1 to M2 and increase the backing, you get to $40 or $50,000 an ounce. I don’t have to go there. My intermediate target is $10,000 an ounce.


“A ‘Major’ Gold Rally Is Coming, Thanks To The Fed- Jim Rickards”
(gold discussion starts at 3:11)
YouTube Video

Earlier this year Rickards explained how he arrived at that $10,000 price for an ounce of gold. From a piece he authored on the Daily Reckoning website back on March 7:

There is a solid mathematical basis for $10,000 gold. It’s actually the implied non deflationary price of gold under a gold standard.

The combined M1 money supply in the world is about 24 trillion dollars. That includes the United States, China, the Eurozone and Japan. Those four entities combine for over 70% of global GDP.

Now, the official gold in the world is about 33,000 tons. That’s not counting private gold, because private gold is not part of the money supply.

So if you wanted to restore a gold standard, how much gold do you need to back up the money supply? My estimate is about 40%.

Historically, central banks have run successful gold standards with less backing. In the 19th century, for example, the Bank of England only had about 20% gold backing. In most of the 20th century, the U.S. had 40% gold backing.

I use the higher number, 40%, because I think a higher number might be needed to restore confidence in event of a collapse. The point is, 40% is a debatable, but reasonable figure.

Many people say there’s not enough gold to support the money supply. That’s one of the objections to gold standard. But my answer is that’s nonsense. There’s always enough gold to support the money supply. It’s a question of price.

Now, if you back 40% of the $24 trillion of money supply with the amount of official gold, it implies a gold price around $9,000 an ounce. But I predict $10,000.

So how do I arrive at $10,000 an ounce?

That’s because I expect central banks to print a lot more money by the time this issue comes to a head. So, by the time the printing presses stop running around the world, that $9,000 number will likely be in the range of $10,000.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

Source:

Rickards, James. “The Path to $10,000 Gold.” Daily Reckoning. 7 Mar. 2017. (https://dailyreckoning.com/path-10000-gold/). 24 Nov. 2017.

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